Munich Personal RePEc Archive

Host Country Reforms and FDI Inflows: Some New Evidences from Turkey

Tursoy, Turgut (2009): Host Country Reforms and FDI Inflows: Some New Evidences from Turkey.

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Abstract

This study examines the effects of various policy reforms on foreign direct investment (FDI) flows of Turkey. In this study, policy reforms - including providing a sound macroeconomic environment, substantial economic growth and a well functioning financial system - assumed to led a surge in FDI inflows into Turkey and make it an attractive country for FDI. Using OLS technique for Turkey’s data of the period from 1970 to 2007, the study aims to identify the variables that observe the impacts of recent policy reforms on FDI inflows. Thus, macroeconomic variables and political instability, financial liberalisation and crisis episodes indicators are used in the empirical analysis in explaining the FDI inflows. The result indicates that lagged of FDI inflows, market size, stable macroeconomic environment, substantial economic growth have a positive and statistically significant relationship with FDI inflows. But, study results also reveal that, with the existing level of financial development in Turkey, there is no statistically significant relationship between financial development and FDI inflows.

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